Broker Check

Market News & Commentary - From The Desk Of David Loesch 02.22.2023

February 21, 2024

  • Refunding bond issues will come to the Muni market when the FED lowers interest rates. Refundings have not played a significant role in a long while as issuers have waited for a lower interest rate environment to borrow. It's important to take advantage of this market now before we start seeing this pattern later this year or next.
  • States and municipalities sold $49.2 billion in long-term debt in 2024, 34.8% ahead of last year's pace. The market has held up well, given the increase in supply. We have been discussing how attractive Muni Bonds are, which shows the strength in our market compared to the last two years. There is talk about a Muni selloff in March, given that supply is expected to increase. It will be interesting to see this play out; if we do get one, it will be an opportunity for buyers.
  • The Primary Market: Visible supply begins the week at $6.84 billion, well below the 2023 average of $8.9 billion.
  • Two Federal Reserve officials who voted on policy in 2024 indicated an openness to three interest-rate cuts this year should inflation progress continue. Any rate cuts will continue to increase interest in our markets; I believe we will see cuts at the end of this year's second quarter.
  • According to the state's budget adviser, California expects to see its deficit increase by 26% to $73 billion due to new data indicating that tax receipts fell short of earlier projections. The latest fiscal year, 2024-2025, forecasts a $15 billion growth in the deficit compared to previous estimates. The Legislative Analyst's Office (LAO), commonly referred to as the LAO, reported that traditional corporate tax collections decreased by over 33% in December compared to the previous year. Additionally, the LAO noted that California's income tax withholding and estimated payments have been relatively weak recently.
  • Illinois is confronting its inaugural budget deficit in three years as it grapples with escalating expenses across various sectors, including education and services for migrants. Governor J.B. Pritzker, a Democratic billionaire in his second term, is slated to present his proposed spending plan for the fiscal year commencing on July 1 this Wednesday. Following consecutive years of budget surpluses, Pritzker now faces the challenge of identifying measures to address a budget shortfall that is anticipated to expand in the coming years.
  • Wall Street economists anticipate that the surge in productivity following the COVID-19 pandemic will persist, supporting robust economic growth without a corresponding increase in inflation. While Federal Reserve officials find this concept intriguing, they maintain a degree of skepticism. Productivity growth has averaged 3.9% over the last three quarters, a rate more than triple that observed in the decade leading up to the pandemic. Enhanced worker efficiency enables firms to increase wages without necessarily raising prices, making monetary policy less preoccupied with inflation concerns.


At The DRL Group, we specialize in helping high-net-worth investors maximize tax-free returns by proactively maintaining their custom bond portfolios through all market conditions.


David Loesch

605-B Park Grove

Katy, TX 77450

866.664.4040 (toll-free)

281.398.8600 (direct)


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